Question
EXERCISE 3-6 Prepare the elimination entry required for the preparation of a consolidated balance sheet workpa- per on December 31, 2019, assuming: (1) The purchase
EXERCISE 3-6
Prepare the elimination entry required for the preparation of a consolidated balance sheet workpa- per on December 31, 2019, assuming:
(1) The purchase price of the stock was $1,400,000. Assume that any difference between the book value of net assets and the value implied by the purchase price relates to subsidiary land.
(2) The purchase price of the stock was $1,160,000. Assume that the subsidiary land has a fair value of $180,000, and the other assets and liabilities are fairly valued.
Elimination Entry, Consolidated Balance Sheet LO 8
On December 31, 2018, Price Company purchased a controlling interest in Shipley Company. The balance sheet of Price Company and the consolidated balance sheet on December 3, 2018, were as follows:
Required:
Exercises
113
Price Company
Consolidated
$ 37,900 57,000 161,600 0 337,000 220,412
$813,912
$112,500 100,000 37,412 300,000 164,000 100,000
$813,912
Cash Accounts receivable Inventory 127,000 Investment in Shipley Company 212,000 Plant and equipment (net) 190,000 Land 120,000
$ 22,000 35,000
Total
Accounts payable Note payable Noncontrolling interest in Shipley Company Common stock Other contributed capital Retained earnings
Total
$706,000
$ 42,000 100,000 0 300,000 164,000 100,000
$706,000
On the date of acquisition, the stockholders equity section of Shipley Companys balance sheet was as follows:
Common stock Other contributed capital Retained earnings
Total
Required:
$ 90,000 90,000 56,000 $236,000
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